Environmental and Economic Accounting for Energy

System of

Environmental and Economic Accounting for Energy

SEEA-E

Draft Chapter 5 Physical Flow Accounts

United Nations Statistics Division

DESA

February 2011

Table of Contents

Chapter 5 Physical Flow Accounts......

A.Introduction to physical flow accounts for energy......

B.Type of flows......

1.Flows of energy resources......

2.Flows of energy products......

3.Losses......

C.Physical Supply and Use Tables for Energy Resources and Energy Products......

1.Detailed supply and use tables for energy......

2.Supply and use tables for total flows of energy......

D.Classifications and boundaries......

1.Energy resources......

2.Energy products......

3. Standard International Energy Product Classification, SIEC......

4.Industries......

5.The production boundary......

6.The residence principle......

7.Imports and exports of energy products......

8.Intermediate consumption......

9.Final consumption by households, changes in inventories and exports......

10.Extractors and producers’ own use of energy......

11.Losses......

12.Measurement units......

E.Use of energy by purpose......

F.Supply of primary energy and imports, transformation and end use of energy......

G.Energy statistics, energy balances and energy accounts......

1.Energy statistics, balances and accounts......

2. Boundaries – residence and territory

3.Industries......

4.Industries’ own transport, transport industries and the transport sector......

5.The energy industries and the energy transformation sector......

6.Supply, use and stock concepts......

7.Products......

8.Statistical discrepancies......

H.Bridge tables linking energy balances and accounts......

1

Chapter 5 Physical Flow Accounts

A.Introduction to physical flow accounts for energy

5.1.Physical flow accounts describe energy flows, in physical units,from its initial extractionor capture from the environment into the economy, and within the economy in the form of supply and use, all expressed in quantitative terms.

5.2.The compilation of the physical flow accounts for energy allows for a consistent monitoring of the supply and use of energy by energy type and by the economic agents (industries and households). In combination with monetary information indicators of energy intensity, efficiency and productivity can be calculated from the physical flow accounts.

5.3.The so-called supply table shows the production and imports of energy products. The use table shows the total use of energy by industries and households, the exports, and the changes in inventories. Losses during extraction, distribution and storage are also presented in the tables.

5.4.Physical supply and use tables (PSUT) have the same structure as the monetary supply and use tables compiled as part of the standard national accounts compilation, and generally the two sets of tables share the characteristic that the total use exactly equals the total supply. Organising physical information using the same framework as the monetary accounts is one of the basic features of the SEEA.

5.5.Physical energy flow accounts are a special case and subset of the physical flow accounts of SEEA. Like the general SEEA physical flow accounts, the energy supply and use tables are compiled first by using mass and volume measures such as tonnes, litres and cubic metres or units specific for energy, such as Sm3 (standard cubic metres). However, because it is useful to measure energy resources and products also by its calorific content of energy, an additional set of accounts, which use joule as the unit, is introduced.

5.6.Throughout SEEA-E the energy products are classified using the Standard International Energy Classification, SIEC, while the industries are classified usingthe International Standard Industrial Classification of All Economic Activities, ISIC, Rev.4.

5.7.Section B introduces the general distinction between flows of energy resources from the environment to the economy and flows of products within the economy (i.e. supply and use of energy between two economic units).

5.8.Section C presents the basic supply and use tables for energy flows. Three sets of supply and use tables are presented. First Table 5.1 and Table 5.2 present supply and use tables, respectively, using natural physical units (e.g. tonnes and cubic metres). Then Table 5.3 and 5.4 present the same flows using joules as the measuring unit. These first four tables distinguish between whether the flows are flows of natural resources, flows of products between different economic units, flows of energy for own use within the same establishment or losses of energy. Finally, Table 5.5 and 5.6 shows aggregated flows for each type of energy without making the explicit distinction between whether an energy product is subject of transactions between economic units or for own use, etc.

5.9.Section D treats classifications and specific definitions and accounting rules used for the energy accounts and provides the background for a full understanding of the concepts behind the energy flow accounts.

5.10.Section E and F present additional energy flow tables; First Section E presents a physical use table, Table 5.12, showing the use of energy by purposes. Then, in Section F, Table 5.13 presents the supply of primary energy and imports, Table 5.14 the conversion of energy and Table 5.15 the so-called end-use of energy. The latter presents the energy use without the double counting of energy, which is a general feature of the standard supply and use tables because they include both the primary energy (e.g. coal) and the converted energy (electricity), which is the result of the use of the primary energy by the energy supply industries. The presentation of the energy flows in Section F is close to the way energy flows are presented in so-called energy balances.

5.11. Section G discusses the link between energy statistics, energy balances and energy accounts, while section H presents bridge tables for the link between energy balances and energy accounts.

B.Type of flows

5.12.When constructing a supply and use table for energy, the SEEA-E implicitly takes the perspective of the national economy. It describes flows of energy resources from the environment to the national economy and flows of energy products within the economy. Losses of energy are also included in the SEEA-E accounts where they are described as flows of residuals from the economy to the environment.

5.13.Flows of air emissions andsolid waste generated by energy production and use are not described in SEEA-E. On the other hand all types of waste used as inputs for production of energy is included.

5.14.The physical flow accounts of SEEA-E are presented in a way, which links the physical flows fully consistent with the presentation of the economic flows of SNA 2008. Since the SNA 2008 does not include so-called own use of energy (production and use within the same establishment)and output of energy, which is subsequently lost, for instance, during distribution, such flows are presented separately in SEEA-E.

5.15.Following the terminology of SEEA, energy products include flows of energy, which are associated with a positive price, while residuals include all flows with zero or negative prices. Thus, energy, which is lost, for instance, during distribution is categorised as residuals.

5.16.Own use of energy, i.e. energy produced and used within the same establishment, is not the subject of any monetary transactions and is not recognised by the monetary accounts. However, in the physical flow accounts, energy produced for own use is regarded as energy products and the flows are recorded explicitly in the accounts.

5.17.Flows within the economy include flows between the national economy and other countries’ economies (the rest of the world), cf. Figure 5.1. Since the national economy is defined in terms of the activities of residents units (cf. Chapter 2 and section C.5 below), there is not a one-to-one relationship between the national economy and the national territory. Some of the flows to the national economy may take place on foreign territory, and some flows on the national territory may be flows resulting from other economies’ activities. Such flows are mainly related to international transport activities.A more detailed figure of some of the flows within the economy is presented in Figure 5.2.

Figure 5.1: Physical flows of energy

1.Flows of energy resources

5.18.Flows from the environment to the economy involve the removal and capture of energy from the environment by economic units in the national territory.Non-renewable energy is removed from the environment through mining and extraction activities. In addition, renewable energy, which originates from sun, wind, waves, biomass and the geothermal system, is captured from the environment.

5.19.In SEEA terms, the supplier of these flows is the environment and the user is the economy, more specifically, the economic agents responsible for the extraction or capture. Extraction of subsoil energy resources can only be undertaken by resident institutional units. An enterprise that undertake extraction is deemed to become resident when the requisite licences or leases are issued, if not before (SNA 2008, 4.15.e)

5.20.Energy is extracted and captured either to be used by the same economic unit, which extracts it (in which case, it is referred to as extraction for own use) or to be supplied to other economic units for further processing or direct use. The industry, which extracts non-renewable energy from the environment as a principal activity is classified under section B of ISIC Rev. 4, Mining and quarrying. The capture of renewable energy from the environment as a principal activity is classified under ISIC section D – Electricity, gas steam and air conditioning supply. The parts of the ISIC industry classification which are of specific interest in relation to the energy accounts, is presented in Section D.

2.Flows of energy products

5.21.Flows within the economy involve energy product exchanges between economic units, cf. Chapter 2. For solid and liquid fuels, these exchanges are carried out in the same way as any other products, typically via trucks and ships, and for the liquids also via pipelines. Steam and electricity are transported via pipelines and cables, respectively.

5.22.Figure 5.2 presents a detailed description of some of the energyproduct exchanges. The solid line arrows connecting the economic unitsrepresent the physical supply and use of energy within the economy: the origin of the arrow represents the energy supplier, while the destination of the arrow represents the energy user.The dotted line arrows represent flows from the environment to the economy.

5.23.Supplies of energy products are provided by imports and by principal activities in ISIC section B, Mining and quarrying, ISIC Division 19, Manufacture of coke and refined petroleum products, ISIC Class 2011 - Manufacture of basic chemicals (nuclear fuels) and ISIC section D, Electricity, gas, steam and air conditioning supply.

5.24.Energy products are used by these industries themselves or by other industries for intermediate consumption either for direct use or for input into a transformation process in order to produce other energy or non-energy products. In addition, the energy products are used by households as part of their consumption, by the rest of the world (exports), or are stored in inventories.

5.25.Energy supplying industries and other industries hold typically inventories of energy products. Although not shown in the figure, increases in inventories of energy products can be regarded as a particular type of use. Decreases in inventories can similarly be regarded as negative uses. This is the way the changes in inventories of energy products are recorded in the flow accounts.

3.Losses

5.26.Within the context of SEEA, losses of energy in physical terms are comprised of (a) flows of energy resources from the environment to the economy that are not available for further use within the economy because they have been returned to the environment; and (b) energy that do not reach its intended destination or have disappeared from storage.

5.27.Within this definition five types of losses of energy are identified by the stage at which they occur through the production process. It is noted that some types of losses may be necessary for maintaining safe operating conditions. This is the case of flaring and venting in the extraction of natural gas.

4.1.The five types of losses are:

i.Losses during extraction/abstraction

ii.Losses during distribution/transport

iii.Losses during storage

iv.Losses due to theft

v. Losses during transformation/conversion

5.28.Losses during extraction are losses that occur at the time of extraction of an energy resource before there is any further processing, treatment or transportation of the extracted energy resource. This applies, for instance, to flaring and venting of natural gas. Some natural gas may also be re-injected into the ground in order to increase the pressure and facilitate further extraction. These flows are also considered as losses during extraction.

5.29.Losses during distribution are losses that occur between a point of extraction or production and a point of use or between points of use and reuse. These losses may be caused by a number of factors. In the case of energy, they may refer to evaporation and leakages of liquid fuels, loss of heat during transport of steam, losses during gas distribution, electricity transmission and pipeline transport.

5.30.In addition, when losses during distribution are computed as a difference between the amounts supplied and that received, they may also include errors in meter readings, malfunctioning meters, etc. These are commonly referred to as apparent losses.

5.31.Losses during storage are losses of energy products held in inventories. They include evaporation, leakages of fuels (measured in mass or volume units), wastage and accidental damage.

5.32.Losses due to theft refer to electricity andother energy that are illegally diverted from distribution networks or from storage. In this case the energy stolen remain within the economy and are actually used for intermediate or final consumption. For the other types of losses, the products return in various forms back to the environment. It should be noted that losses due to theft are often difficult to separate from e.g. distribution losses in practice.

5.33.Losses of energy during transformation from one energy product to another are linked to the difference between inputs and outputs of products, and as such part of the specific industry’s intermediate consumption. It appears, for instance, when coal is transformed into electricity. It is a different type of losses compared to the four other types of losses and it is only measured in calorific values. In mass terms it is simply reflected by the fact that intermediate consumption of energy products results in an output of other energy products and residuals in the form of air emissions and solid waste.

5.34.Losses due to evaporation and leaking are often measured in quantity terms (cubic metres, tonnes), while losses of heat to the surroundings are often measured in in energy terms (terajoules, KWh).

5.35.Losses are also dealt with in Section D.11.

5.36.The flows of energy residuals and the transformation losses are not shown in Figure 5.2, but they are shown explicitly in the relevant supply and use tables.

Figure5.2: Detailed description of physical energy flows within the economy

C.Physical Supply and Use Tables for Energy Resources and Energy Products

5.37.In this section, supply and use tables for energy are presented. In Section D more details on the classifications and definitions lying behind the tables are added.

5.38.First a set of tables showing the flows of all energy resources and energy products are presented. The tables are set up at mass or volume units (tonnes, cubic metres, etc.) as well as at energy units, terajoules.

5.39.The tables include all energy products, also those energy products, which are transformed into other energy products. Therefore, the energy content of some products is counted more than one time. Coal, for example, is used as input into a transformation process to obtain electricity and heat, and the accounts record the coal as well as the resulting electricity and heat. Therefore, in addition, in section F, tables, which record only the energy content once, are also presented. The tables are 1) supply of primary energy and imports, 2) transformation of primary energy and imports into secondary products, and 3) end use of energy.For some analytical purposes, e.g. analysis of a country’s overall energy consumption these tables are often better suited than the tables for supply and use of all energy products.

1.Detailed supply and use tables for energy

5.40.Physical supply and use tables for energy record the flows of energy resources and energy products in quantitative terms. They are generally based on the principle that the total supply of each energy resource or energy product is equal to the total uses of the same energy resource or energy product.

5.41.Table 5.1 and 5.2 present the standard supply and use tables for energy resources and products at the mass or volume units (tonnes, cubic metres, etc.) that are characteristic for the various resources and products. Table 5.3 and 5.4 show the same supply and use at the common unit terajoule expressing the calorific value of the products. Section D.11 provides more information on the conversion from mass and volume units into calorific values.

5.42.The supply table presents for each energy resource and energy product how much is supplied by different units.The items in the table headinginclude two main categories: supply from the industries and imports. The supply from the industries is classified according to ISIC.For the imports, energy products purchased by residents abroad are shown explicitly as an “of which” category.

5.43.The rows of the supply table are divided into three blocks.

5.44.The first block shows the supply of energy products, which ultimately are supplied to other establishments, and for which a monetary transaction is involved. The energy products are classified according to theStandard International Energy Classification, SIEC, cf. Section D. Since the supply of energy products presented in this block represents energy products supplied to other establishments, they are all accompanied by a monetary transaction and there is therefore a full correspondence between this physical supply and the supply presented in the monetary supply table, Table 6.1 in Chapter 6.